American Airlines Makes Its Case Against Union Contracts

A federal bankruptcy judge in New York City listened to opening statements by attorneys for American Airlines Monday as they ask him to allow the company to throw out all its union contracts.

AMR filed for bankruptcy at the end of November 2011.

American wants to eliminate 13,000 union jobs - about one in every four union workers - freeze or terminate pension plans, curb health benefits, reduce time off and impose many other cuts.

3/27/2012 Related Story: American Airlines Parent Company Files Motion To Dissolve Labor Contracts

In a letter, the vice president of employee relations says statements by the TWU are painting an inaccurate picture about what will happen if union members do not accept American's offer.

Laura Einspanier explains that things like a 1.5 percent wage increase, early retirement incentives and a 401(k) match of up to 5.5 percent are only available under the company's offer.

"I just implore you to take the time to go through those facts because those are the only facts that really matter," AA Operations VP Jim Ream said.

Another VP says the last, best offer has several bonuses for employees that the restructuring plan in front of the bankruptcy court does not.

All of those incentives are taken off the table if union members vote against the offer.

"We've spent months working on this and I think we have come up with a plan that is the best possible outcome for the vast majority of the folks that are covered by these agreements," Ream said.

Tulsa's union did not try to sway its members to vote a certain way. However, American took issue with statements from four local union presidents in other states who are urging their members to vote "no."

The company says concerns that its last offer doesn't guarantee maintenance on the fleet will be done by the Tulsa base are unfounded because it has no such provisions in its current contracts.

Under Section 1113 of the U.S. Bankruptcy Code, companies are allowed to ask the court to reject union contracts as part of their reorganization.

Last week, American's three major unions announced their support for a merger with US Airways, which American opposes.

4/20/2012 Related Story: US Airways Makes Move To Take Over American Airlines